Amsterdam City FTTH Network Still One Step Ahead

Amsterdam which was officially given a thumbs-up by European Commission to build an open fiber to the home physical infrastructure only in late 2007 , an approval process that lasted almost 12 months , has now announced a new agreement between initial shareholders and Reggefiber/KPN (Earlier in 2008, KPN acquired control of Reggefiber which is among the initial partners of the project). The plans have changed and the targets are set to another 100,000 open access fiber connections. The firm structure has changed as well. With the new deal the city and the housing corporations will be holding a 30% share of the firm (currently holding approx. 33% shares each) while Reggefiber will assume the remaining 70% of ownership.

This move will certainly have significant regulatory and competition implications in the country but it certainly brings KPN one step ahead of its competitors (and show the way for other incumbents as well). Many will also argue that this move guarantees KPN’s interest in and demand for fiber connections provided by the citynet FTTH network. Even more so, KPN seems to embrace open access principles based on which the citynet was built.

Side note: Not all municipal projects in the Netherlands have been approved by EC and the Dutch government. For example, the case of Appingedam broadband network was disaproved by EC in terms that the incumbent’s and the competing cable operator’s network were found sufficient to provide competitive high speed connections. In fact, and this I may very well understand it wrong (so please correct me if I do), according to a recent publication (Janssen, Kamphorst, “Triple play: How do we secure future benefits”) that fell in my hands, the Dutch municipalities are not allowed ownership to broadband networks with only some exceptions (Amsterdam being one of them).

Anyways, enjoy the moment and read the city of Amsterdam press release below for more information:

City of Amsterdam – Press Release

Amsterdam, 4th February 2009 11:15 CET

Further roll out of open access fiber network in Amsterdam with Reggefiber / KPN

Mid 2009 Amsterdam will see the next stage of the roll out, covering another 100,000 open access fiber connections. This follows from an agreement between the initial owners of Fibernet Amsterdam and the joint venture of Reggefiber and Dutch incumbent telco KPN. The agreement ensures the construction of a high quality and future proof communication infrastructure, a basic condition for the city’s economic and social prosperity.

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The contract ensures the open access character of the network of now 43,000 homes connected and passed. Other service providers or operators are as welcome as before. The agreement will now be submitted to the Dutch competition authority NMA.

Every year the need for a faster network increases. In just 15 years the percentage of internet users in the Netherlands grew from zero to today’s 90%-plus, the large majority of them broadband users. Alderman Van Poelgeest: “Fast networks are important for the future of the city of Amsterdam. We want our citizens to be offered the best in telecare, e-Health, distance learning and teleworking. As the construction of this fiber network will take quite a few years the right time to start is now.”

In the Amsterdam network every address is connected directly with its own fiber to the neighborhood switch house. This ‘point to point’ architecture ensures capacity even when many neighbors are teleworking or watching videos at the same time. The environment benefits as well: fiber only networks consume 10 to 15 times less energy than networks that combine glass fiber and copper.

OPTA / NMa

The open access nature of the network is fully in line with last December’s decisions of the Dutch telecom regulator OPTA and the competition authority NMa on glass fiber networks as well as the cooperation between Reggefiber and KPN. Alderman Van Poelgeest: “Amsterdam principles meet the conditions of OPTA and NMa and have KPN’s full support. Therefore, I am very pleased with this deal. The Amsterdam municipality keeps their promise: further roll out of the fiber network, together with strong and determined market parties. Municipal involvement now can decrease, probably eventually to zero. Last but not least, in the view of the current circumstances this fiber deployment at once generates employment and it boosts the Amsterdameconomy.” The participating parties focus on a fiber roll out in an economically viable manner. This means that after or during the roll out to the next 100,000 lines a decision will be taken on the then remaining 250,000 Amsterdam addresses.

Decreased shares for housing corporations and municipality, KPN service provider

In the initial design the four housing corporations (Ymere, Stadgenoot, Rochdale and De Key) jointly had 33% of the shares just like the municipality and Reggefiber. In the new situation Reggefiber through additional deposits acquires 70% ownership. The municipality and joint housing corporations keep 30% ownership. In the agreement it is stipulated that key decisions can only be taken with an 80% majority vote. An independent ‘Priority Foundation’ will hold a golden share with veto rights for key issues such as the open access nature of the network. Starting Autumn 2009 KPN will offer services on the new as well as existing parts of the network, in open competition with other service providers, in conformity to OPTA / NMa rules and regulated rates.

Historic Step

This morning’s signed agreement is the first of its kind: until now there has never been an example of this kind of cooperation to expand an open access fiber network. Amsterdam’s Mayor Cohen: “I expect the expansion of the open fiber network to have far-reaching positive implications for Amsterdam’s development. Today, like energy and water supply broadband is an essential necessity that should be accessible to all.”